hello, everybody. a very warm welcome to talking business weekly with me, tanya beckett. let's take a look at what's on the show. can we really afford to get old? ageing populations mean rising pensions and health care costs, but with governments struggling for cash, who is going to pay? it's the problem at the heart of this yea r�*s protests in france, with other countries facing similar challenges. will living standards need to slip or can change keep us comfortable in our senior years? i'm going to be discussing all of this with these two, this pensions expert who says we're sitting on a global pensions time bomb. that means we need to raise retirement ages as life expectancy increases. and from this leading economist who will explain why an ageing population isn't good news for governments that are trying

to balance the books. plus, with the cost of living soaring around the world, global debt has hit a record $300 trillion. so we'll hear from the boss of europe's leading debt collection agency about how it balances the need to recover cash for its clients with people's ability to pay. wherever you'rejoining me from around the world. once again, a big hello and a warm welcome to the show. getting old is something that happens to all of us. butjust how are we as individuals and as a society going to pay for it? this year, france has seen high profile and often violent demonstrations about government plans to address exactly that question. but the french aren't alone, across europe as well as in the us and japan and many other countries. our populations are getting

older at a time when the global economic system has undergone a series of major shocks. since the second world war global life expectancy has risen steadily, while birth rates fall. in 2019 before the pandemic, the average person was expected to live 72.8 years. but by 2050 the un reckons that that will have risen to 77.2. it means a growing strain on each person who is economically contributing to society. in 2019, each 100 of them supported 16 over 60 fives. but by 2050, that's forecast to nearly double to 28. as you can see, europe and north america face the biggest challenges with a smaller share of our population churning the wheels of the economy. there are questions about how we share the money they generate around.

traditionally, one of the most common ways of saving for old age has been pensions, where workers put aside some of their cash for their later years. but one forecast for the six biggest savings systems which are the us, uk, japan, netherlands, canada and australia expects a $221; trillion funding gap by 2050, meaning there simply won't be enough money to fund the lifestyles people in those countries are expecting. many countries are in the process of increasing retirement ages, but as you can see in this indication, it varies across the world's ten biggest economies and can also vary within them for a range of reasons. so do we have to work until an older age or change our expectations for how we live in retirement? it's a tough question for governments everywhere, but perhaps nowhere more visibly than in france, where for months people have been taking to the streets,

often leading to angry confrontations with the police. it's all because of president macron�*s efforts to raise the retirement age to 64 from 62. he says that will make it more affordable to look after old people. but even 64 is a lower retirement age than in many other countries. nonetheless, these protesters have been explaining why they oppose it. translation: i think that at a certain age l you have contributed enough and given enough to society to be able to enjoy your life. and that as a student, i haven't even started working, but i might have to work until i'm 70, so it's not an ideal future. we want to be able to contribute for current pensioners, but we can't contribute enough because we are not paid enough and we are not going to contribute enough to have a decent pension. so it's a complex problem. personally, i don't want - to work longer and especially not for 43 years until an age i when you're almost old enough

to go into a care home. i've given my best years - to work and i'd like to enjoy a little bit of retirement - younger, especially not at 64. people see around them that there are plenty of colleagues who don't even make it to the current legal retirement age. so how can we expect them to make it to 64? and then for us it's 64, but for the years to come and our children, what age will it be? and our children, what age will it be 66? so just what does the future hold and why are experts so worried that we might run out of cash to look after old people? i've been speaking to a leading pensions expert who's also a former head of institutional investors at the world economic forum. hynek, thanks for joining us on the show. commentators and experts, including you, have said that we are facing a pension time bomb. what is meant by that? the pension time bomb is really the fact that we are living far beyond what pension systems were originally designed to pay out for.

so, an example i use i like to use to illustrate this is in the united states, age 65 was calculated and it's currently commonly used all around the world as a retirement age. but age 65 is a retirement age was first derived back in 1935 when social security first started. 0ur life expectancy in the united states back then was only 61. so you can imagine, systems were only designed to pay for a very few years of benefits post post retirement. and now we're routinely living much beyond that. the most obvious answer, of course, is that we all work for longer. but we've seen very high protests in france against the notion that president macron would raise the pension age from 62 to 64. so it really isn't that simple, is it? no, it's really not. i think the issue is from the perspective of running a pension system, you have two, two sides. you have those who are running the pension system like

the macron government. and they're trying to make sure that the pension system can be around for future generations and making sure that that this is a sustainable system. but the pension promise is, in fact, a compact between the people receiving the benefits and the government providing the benefits. and from their perspective, they feel like that compact has been broken. and in fact, you've seen similar unease around the world whenever retirement age is talked about as being. when people talk about raising retirement age. an example i like to give is even in russia, where vladimir putin has such control over the media, when when he tried to raise the retirement age, his popularity rating, which as you can imagine, would take quite a bit to do in a country such as russia. most of the problem is, of course, that we're living longer, but it's not quite as simple as that. there are some other aspects to society which are important, aren't there? i think that one of the key

issues, but it's also the amount of time in which you're healthy and capable because that directly impacts the amount of spending that's required, which is depending on whether you live in a country with a where health care is provided or one in which you have to pay for that health care, that really impacts the amount of pension savings you require. and from the perspective of the government, if the workforce is shrinking as it is in many developed countries, we're seeing fewer people contributing, aren't we? yeah. and that's one of the weaknesses of a pay as you go system. so social security in the united states is an example of that. there are some countries that still utilise this pay as you go system, which reallyjust means that the current generation of workers is paying for the previous generation. but in countries, in many parts of the developed world, you've seen these shrinking populations and that the working population is already ageing quite rapidly. and the influx of younger people who are paying those

taxes and paying into those benefits is shrinking. japan is an extreme example of that, but an example that we studied when we were at the world economic forum was that of china, because china, although they have a very large population, they have the one—child policy which they've since repealed, but you still have a glut of people at the working age right now that in another ten, 15, 20 years, china will be where japan is today because of that. and then there's the question of how much people are contributing and how well funds, pension funds are growing. because when you have a conflict, like, for example, what we're seeing in ukraine, that's having a profound impact on people's ability, spare cash that they can contribute to pension funds, but also how well those pension funds grow. yeah. tanya, you've hit the nail on the head there in terms of how we pay for pension systems is really only two things contributions that we put in and the investment return on those contributions.

and then the investment return really is a function of the of the broader of the broader economy. i will say that for long term pension systems in general, the even something as horrific as the word ukraine right now is considered a shorter term impacts in that these pension funds have a time horizon of 20, 30, 40 years or more. and from that perspective, even a shorter term conflict, although not good for returns in the short run, will be smooth over in the long run. the other perspective is for those of us who are receiving benefits and that long horizon is scant comfort. and that is we saw that happen even in 2008, the the global financial crisis. a lot of people who were thought they were ready to retire at that point found themselves having to work a few

years extra because the markets had to recover in order for them to once again have enough savings for them to cash out. the reality is then a lot of governments are going to be under pressure and a lot of private pension fund providers too. so does the responsibility then fall back on the person, the individual, to make sure that there's enough for their retirement? i think at the end of the day, we all have to take some accountability in terms of how much. we save for our retirement because only we really know how much we'll need at retirement. if i look at countries where they've been very successful, i would say the netherlands and denmark. they have a strong public system backed by a strong private sector system as well. the public system in those countries, in effect, supplement that by enabling individuals to save more themselves and for companies to save for them as well in order to provide the standard of living beyond what the base subsistence level is.

haneke, thank you very much indeed forjoining us on the programme. thank you for having me. in most countries, people aren't left on their own to fund their old age. there's often a state pension, regular payments from the government to help people pay their bills. those governments also find themselves on the hook for health care, as well as funding other needs for the elderly. all that is funded by the taxes we all pay. but there are growing concerns. therejust isn't enough coming in. something i've been discussing with the chief economist at moody's analytics, the risk assessment company, that, amongst other things, analyses government finances. mark zandi, welcome to the programme. it's good to be with you, tanya. why is it that ageing populations are proving such a challenge for government finances at the moment? well, as the population ages and people need pensions and need health care, that's very costly.

and the burden of that cost falls upon governments. and so as the population ages and those costs rise, government finances are under a lot of stress, but these sort of demographic changes don't happen overnight, do they? it's been many years in the making. so how is it that governments are not better prepared? yeah, no, you're right. i mean, this is well known that the population was going to age. there's been some surprises in terms of the sharp decline in replacement rates across across the globe. fertility rates are down. people are just not having children at the same rate as they did just a few years ago, a decade ago. so there's been some surprises. but you're right, we knew this was a long, long coming. i think it's very difficult for governments to address problems until they're directly in front of them. the political constraints here are quite significant because it's costly. so you've got to raise more tax revenue or cut benefits. and that's not easy for policymakers to do

anywhere in the world. and you or you can raise the pension age, as we've seen, there's pushback against that in france. exactly. i mean, that would be the most obvious way to address the problem that governments are facing. in providing benefits to retirees and older citizens is to raise the retirement age, and that would be consistent with the increasing longevity of the population. you know, we're all living longer and therefore it stands to reason that we should work longer as well. but that that's a tough one politically. very, very difficult to raise that as we can see in many parts of the world and most obvious most recently in france. and it's particularly in focus now, presumably because governments are stretched. the conflict in ukraine was sort of the start of that, but there are many other aspects and simply governments are trying to borrow more. yeah, governments are under

a lot of financial pressure and it's been building for quite some time. most immediately it's been the russian war and the impact that's had on the global economy. of course, the pandemic was incredibly costly to the global economy, but you can go all the way back to 911 and the fight against global terrorism and the wars in iraq and afghanistan. there's been a lot of costs that governments have had to face, and that's really sucked down a lot of energy and resource and made it much more difficult for governments to face up to the reality that they now face, and that is an ageing population and the demands that's putting on their finances. also, we look at growth forecasts at the moment for size of economies, gdp, and it's not very encouraging, is it? so looking forward, there's not much of a solution in sight? yeah, growth rates have slowed quite sharply and part of that's just the ageing, right? i mean, because we have people retiring, leaving the workforce or working less hours, that means less gdp slows economic growth.

and there is a lot of evidence that the ageing of the population also weighs on productivity growth, in part because, you know, older workers tend not to adopt new technologies as quickly. they're certainly not as entrepreneurial. they'll start companies at the same pace as younger workers. so it's kind of a double whammy as the population ages, it requires more government resource, but it's also weighing on on the economy and the ability of the government to raise the revenues to finance those those needs. so what can governments do then? we know that they're having to shell out a lot at the moment in terms of interest payments. they're overborrowed as it is, but what levers do they have to hand? well, really to first is raise more revenue. so they have to potentially increase taxes. many economies across the world, we've seen an increase in income and wealth inequality and a lot of higher income households that probably could shoulder higher tax rates. but probably even more

importantly, that is a focus on on benefits, increasing the age of retirement and and also focusing on the cost of particularly medical care. medical care is a big part of taking care of our older citizens and anything that can be done to address the cost of medicare medical care, slow that down would be very helpful in addressing these long term fiscal problems that we have. what do you think the solutions are to make sure that ageing populations don't bankrupt governments? well, the solutions are a to z. i don't think there's a slam dunk, smoking gun here we do this and we solve our problem is going to be a range of adjustments that are going to be required. everything from increasing the age for retirement to increasing taxes on high income, high net worth individuals and businesses, to addressing immigration policy, to focusing on trying to incent populations to save

more for their own retirement. so there's there's not one solution here. there's got to be many, many solutions that all add up to addressing this problem. otherwise, this problem is going to overwhelm us. mark zandi, thank you very much. sure. my pleasure. thank you for the opportunity. i'm going to throw a numberat you. $300 trillion. it's a huge sum. and according to the financial information firm s&p global, it's how much debt the world holds. it's at record levels nearly three times the size of what the global economy produces in a year. and some are warning it will only get worse because of the impact of rising inflation and interest rates. so how much of a struggle does all of that make it for us to pay our bills, loans and mortgages? i've been speaking to the boss of sweden's interim europe's biggest debt collection agency, andres rubio, thank you very much

forjoining us. i just want to ask you first what your company does. how does it work? what we do is one thing — collect on late payments on behalf of over 80,000 clients across all of europe. we're in 24 countries, and we do that with 10,000 people who have 250,000 conversations a day with consumers who have unfortunately fallen into difficult times and have fallen behind on their payments. and we work with them to find solutions, predominantly payment plans, so that they can work through their late payments. who are your clients? clients are banks, energy companies. right now, what's interesting, because of the recent energy crisis, we see a lot of mobile phone companies, energy companies who aren't having their bills paid. but the largest source of clients for us is the financial system. and what's interesting recently, tanya, is that the stress we're seeing is certainly evident with the more meaning, the less meaningful bills, the energy and mobile, etc..

we have not yet seen that lack of payment transfer over into things like mortgages and consumer credit to a degree, although you've seen stress build up in the financial system over the last two years. are you finding that the economic environment that we find ourselves in now, high inflation, high interest rates, is making the debt problem worse? so, the answer is yes. what we see is over time and across countries, are comparative of who is in a more difficult situation and who isn't. when we look across all of europe, it's absolutely getting worse across the board, but it's very different by different countries, just as an example. the uk is probably the most difficult company or sorry country right now in terms of our ability to collect on past claims. not surprisingly, the uk is the highest, the most impacted and the first impacted by the energy crisis. it has the highest percentage of respondents in our recent survey as to how many firms are receiving inordinately high wage demands and all that is translating into the consumer having difficulty and the small and medium sized enterprises

and even large companies in the uk probably being most affected. the rest of europe is at different speeds, but moving in the same direction. why might certain countries be more exposed than others other than how the cost of living crisis is impacting them? does it also have to do with when they raise interest rates how long that takes to feed through? absolutely. i think different countries have different levels of banking and non—banking. different countries have more variable sized mortgages, more fixed rate mortgages. so it takes a while in the uk as an example, it's highly variable. and when you say there's a fixed rate mortgage in the uk, it's not fixed forever. like the concept in the united states, it's fixed for two or three years on average, i think it's less than two years. so it takes time for those interest rates to flow in. and what we have is a consumer across all of europe that's seen their food, their energy grow up and now their car loan

and their mortgage is going up. although the car loan and the mortgage is going up less rapidly because it takes time to flow through into the system because of past arrangements and fixed interest rates and the like. because we're not done with this yet. interest rates are going to continue in many cases to go up and the impact, of course, is delayed, but it will ultimately be felt. when will we meet? when will we reach the bottom? it's a very good question. and if i had a if i had a perfect crystal ball, i would be doing other things. but the the reality is i see it accelerating into the end of this year and then really being 24, being the year where we're going to feel it the most and then into 25, hopefully we're recovering at the consumer level as well as the corporate level. this is also a very difficult time for companies, isn't it, because they are struggling, too, and that feeds back also into society? 0h, absolutely. without a doubt. i mean, companies are subject to energy costs. companies are subject to wage pressures, companies are subject to rising interest rates.

they can't pass this on, or if they can, they contribute further to the cycle of inflation. what ends up happening is they don't invest. they scale back their growth plans. they focus on indebtedness, they focus on efficiencies, cost cutting, and they don't make payments. and so they stretch out their payments. and that's one of the big drivers of our business and that we speak to people who are behind their payments, be it a small or medium sized enterprise or an individual. and we see it across the board accelerating across the board. what happens to people who ultimately cannot pay? that's the that's the difficult one, isn't it? yeah. i mean, there are unfortunately cases where individuals just cannot pay. they've fallen onto a difficult time. they were too indebted to begin with. what we do is we initially get involved in a very constructive and amicable phase with the consumer on behalf of our clients. and we work through that. we maximise the potential for them to pay. but if they still do not pay or if they do not engage with us, it does unfortunately go to a legal process and then that individual will be in the credit bureaus, will be in the system as someone who has not paid their bills and they won't be

able to get any future bank account or credit, they're effectively excluded from the financial system. what we do is we work, as i mentioned earlier, with the consumer to try to find a solution to get them back on their feet. and in the last year, we've helped 4.2 million people do so. quite often when people get into debt and they can't pay it back, they find it ends up costing them more in the longer run. and coupled with that is a is a taboo associated with debt, isn't there? so these these two things are barriers to. resolving the problem. i think we're in a situation where we've created a society where it's very easy to get into debt. the standards for how much debt you can take on are quite lax, particularly at certain moments in the economic cycle. there shouldn't be necessarily a taboo about debt. i think that ultimately, debt is a perfectly viable way to buy a house, to buy a car, etc., so long as it's within your economic means to repay that debt. unfortunately, this requires financial literacy where when when we assess and we create surveys with

consumers as well as companies. there's not a high level of financial literacy across europe. less than 50% of the people we surveyed can actually answer a very basic interest calculation on a principal balance of a loan. so there's still a lot of work to do. andres rubio, the chief executive of interim, thank you very much indeed forjoining us. thank you for having me. have a good day. that's all for this week. you can keep up with all the latest on the global economy on the bbc news website and smartphone app. don't forget, you can get in touch with me and some of the team on twitter. i'm at bbc time. tanya becket. bye bye for now. hello. there were two main parts to saturday's weather story, some heat and some thunderstorms. it was by quite some margin, the hottest day of the year so far, 32 degrees celsius in parts of surrey. lots of other places not too far behind. but for some, that heat

through the afternoon, into the evening, spawned some thunderstorms. a dramatic view for this weather watcher in shropshire. this is how it looked on the radar picture through saturday evening across parts of the midlands, east wales, north—west england and also up into western scotland. some quite intense thunderstorms, a lot of rain falling in some locations. and for sunday, well, it's more of the same, more hot sunshine, but more scattered thunderstorms. in fact, a few showers and storms from the word go across parts of scotland, one or two, perhaps through the channel islands, central—southern england. and while there will be some spells of warm or even hot sunshine through the day, all that will do is intensify those showers quite hit and miss some places avoiding them. but if you catch one across parts of southern england, the midlands, east wales it could give torrential rain, squally, gusty winds, thunder and lightning. 30 degrees in london somewhere could get to 31. northern england seeing spells of warm sunshine and the odd thunderstorm, scattered showers for

northern ireland and some continuing across scotland. maybe not quite as warm here as it was during saturday. now for sunday night, it's another pretty humid affair. some showers and thunderstorms are set to continue. some areas of low cloud, mist and fog, but some clear spells, too. but overnight lows, generally, 11 to 16 degrees. and bear in mind, we'll only get down to these temperatures very briefly because as soon as the sun comes up again on monday morning, those temperatures will start to climb. plenty of sunshine around, but again, some scattered showers and storms, perhaps a line of thunderstorms popping up from london through the midlands and into parts of mid wales. again, a very warm day, widely temperatures between 20 and 27 degrees. some spots could getjust a little bit warmer than that and deeper into the week, while high pressure remains just about in charge, not quite strong enough to suppress all of the shower activity, there will be some showers, maybe the odd thunderstorm. and as more of an easterly breeze starts to develop, it could be that those temperatures drop back just a little bit. but broadly speaking, lots of dry weather

and sunshine and it is going to still feel very warm.

live from washington, this is bbc news. former us president donald trump makes his first public comments after being indicted for his handling of classified documents.